Wednesday, June 24, 2015

Twitter - What's wrong with the business, and is it fixable?

Twitter has been in the news a lot lately. The reason is simple. Company has permeated so much to the lives of people, that any issue gets to be focus of mass media.

What's wrong with the business model?

The business model of Twitter is pretty straightforward, and it is based on advertising revenue. One of the main drivers of a successful advertising business is having a growing base of unique users or visitors. Hence the fallout of Twitter with investing community. Twitter has been losing traffic for the last couple of quarters. There are major issues in active use base as well. Many people just don't participate in the active twitter life style.

But why?

Well, it seems to me that Twitter has not yet identified its mission, and that is the major problem, Why would a person use a Twitter service? For communication, for news, for entertainment or anything else. I use Twitter for news, but its cumbersomeness actually repels the service. I am no longer involved in the service, as I can't follow up with the twits that fill my newsline. One solution for me would be classification of the twits according to the themese that are the most interesting to me.

The other problem that Twitter has is the lack of interest from the younger generations. It is really a service that has a lot of information load, and in this time of our life, many people are not just interested in the news. People need customized news.

Well, third element concerns the execution of ideas. Management of Twitter has been under constant scrutiny for the issues at the company. Maybe, new management will have better ideas and better execution capabilities. For now, I would strongly advise to stay away from the stock.